Business

When the mortgage debtor defaults

Article Abstract:

Mortage lenders can choose from among a number of available remedies in case of a default by mortgage debtors. Mortgagees may initiate power-of-sale proceedings if payments are not made within a specific period after the due date. They may also avail of a foreclosure action, in which case the property in question is taken in total satisfaction of the debt. An action for possession may also be used and pursued in combination with other available remedies. Before selecting a remedy, however, it is important to consider several factors, such as the property's market value, the mortgagees powers under the contract, the mortgagor's financial strength and others.

Pricing of mortgage-backed securities with option-adjusted spread

Article Abstract:

An alternative approach for the calculation of the option-adjusted spread for the mortgage-backed securities (MBS) using partial differential equations has been developed. The new method solve the problem of slow convergence and large error resulting from the Monte Carlo method. The introduction of new variable that carry natural meanings also solved the problem of the path-dependency of MBS. A numerical algorithm was also developed to optimize convergence and minimize errors.